The law is to be changed to allow up to three prostitutes to work legally in brothels, the Government confirmed today.
Currently only one prostitute can offer paid sex without breaking the law.
Launching the Home Office's new prostitution strategy, minister Fiona Mactaggart said the current position meant that women were forced to work in unsafe conditions.
The Government is also creating a new penalty specifically for prostitutes so the courts can divert them towards help for drug or alcohol abuse.
The new penalty will be available for people convicting of loitering or soliciting for prostitution, which is presently dealt with by a fine in most cases, which the Government said did not deal with the underlying reasons why women went on the game.
Today's strategy document, which applies to England and Wales, said: " At present only one person may work as a prostitute - more than that ... and the premises are classed in case law as a brothel.
"This runs counter to advice that women should not work alone in the interest of safety.
"The Government will make proposals for an amendment to the definition of a brothel so that two or three individuals may work together."
Ministers have already ruled out a previous proposal to create licensed "red light" zones to deal with street prostitution.
Today's document also called for kerb crawlers to be "prosecuted rigorously" to protect communities from problems associated with street prostitution.
There should also be warning signs, CCTV and extra street lighting in red light areas, it added.
Ms Mactaggart said the three working together could include a "maid", or receptionist.
She added: "My understanding is that it should be two women working as a prostitute but they might have a receptionist.
"I'm not encouraging the commercial sale of women's bodies.
"I don't think that is something the law should do. I don't think it proper for us to encourage that kind of activity.
"However, I think the evidence that women working on their own are putting themselves in danger is powerful, and recognise that this is not something that is going to be solved instantly."
Asked how neighbours of premises being used by two or three prostitutes would be protected, she added: "That is a very important issue.
"It is one of the things we will be consulting about before we bring in legislation.
"We will be consulting about how we should do it.
"Part of the problem about not having a national co-ordinated strategy has been that interventions in particular areas have tended to disrupt the street sex market in one area and moved it.
"I'm not trying, by having a clear strategy in the street sex market, to move it from the streets to a series of pairs of women working out of flats and causing a nuisance to their neighbours.
"That is not my intention but I do think that very small-scale operations can operate in a way which is not disruptive to neighbours."
A previous Home Office document which discussed allowing two or three individuals to offer paid sex at an address would "effectively decriminalise" their form of prostitution.
The paper, published by former home secretary David Blunkett in July 2004, said: "There are some concerns that the current legislation defines a brothel in terms of two or more individuals working together to provide sexual services.
"It has been suggested by groups who support those involved in off-street prostitution that this might be amended to effectively decriminalise two or three individuals working together, to increase their ability to protect themselves."
The minister also said she did not support prosecuting men for rape if they had sex with women who have been trafficked from abroad to work as prostitutes against their will.
"One of the things that struck me studying this is that the reporting of women who have been trafficked is quite often done by their customers," she said.
"Men who use a brothel and encounter a woman who they think has been trafficked quite commonly report that to the police.
"I am pleased to note that fact.
"I think that the reason why men report it in that case is because they don't think that what has happened to this woman is right, even if they think using prostitutes is right and something they are prepared to do.
"I therefore think that it is quite a complicated issue."
Today's document also suggested making more use of existing powers to deal with kerb crawlers, including wider use of re-education programmes.
The courses, paid for by the offenders, are already in use as an alternative to prosecution for a first offence.
One course in Hampshire costs £200 per person and has already seen 304 kerb crawlers take part, with only four re-offending in the county, it said.
Ms Mactaggart rejected calls for women trafficked to Britain to work as prostitutes to be allowed to remain.
"We need to give them protection, we need to help them to get out of prostitution and we need to help them to shop the people who have exploited and trafficked them," she said on BBC Radio 4's World at One programme. "But if we were to offer women who are trafficked to Britain as prostitutes a right to remain here legally without any question then actually what we would do is make this problem much worse."
The Liberal Democrats called for managed red light zones in designated areas.
Home affairs spokesman Mark Oaten said: "While the Government is right to highlight the abuse involved in on-street prostitution, this new strategy is a missed opportunity.
"It will do very little to reduce the number of prostitutes on the street, to improve the appalling conditions they work in, or to tackle health problems.
"We need smart solutions, not the same old failed approach. We support the piloting of managed zones in designated areas of cities, subject to a code of conduct and regular contact with police and health workers.
"The object of these zones is not to tolerate prostitution but to move it to a specified area where professionals can work with prostitutes to help them reach a point where they can choose other employment.
"The example of Liverpool shows that the idea is effective, and that plans for a zone can be drawn up without alienating businesses or local people."
Association of Chief Police Officers spokesman and Gloucestershire chief constable Tim Brain said the new strategy would provide a "much-needed focus and sense of direction".
"It is important that the police and our partners listen to communities who suffer the nuisance of on-street prostitution in their neighbourhoods and fully engage them in the process of finding solutions," he said.
"One such solution, however, is not so-called tolerance zones or managed areas.
"I believe the Government is right to reject the option of creating such areas."
He added: "The strategy calls for the police to be more proactive in dealing with those who profit from prostitution by exploitation.
"Of particular importance are children and those trafficked both from abroad and within the country.
"As an organisation, it is also incumbent on us to ensure those who are involved in prostitution have the confidence to come to us when they have been the victim of such coercion or indeed abuse or assault by anyone."
Children's Society spokeswoman Kathy Evans welcomed the Government's emphasis on preventing children getting drawn into the sex trade.
"Research shows that more than half the adults involved in prostitution first became involved while teenagers with 15-17 a high-risk age for falling through the child protection safety net," she said.
"A clear focus on tackling and preventing the abuse of teenagers caught up in prostitution is important not only for protecting children today, but also for reducing the scale of the problem in years to come.
"Plans to update the guidance on child prostitution will, we hope, offer the opportunity to close a loophole allowing children to be prosecuted if they repeatedly return to prostitution despite being cautioned by police.
"Although the number of prosecutions has been reduced significantly, we believe that any child punished for being sexually abused is one child too many."
The Conservative home affairs spokesman Edward Garnier said: "Prostitution is a serious problem, which needs to be tackled in a thoughtful and sensible way.
"We need to focus on the underlying social problems which force men, women and children into prostitution, such as family breakdown, drug misuse, child abuse, domestic violence and debt.
"The Conservative Party realise the need to try and stem the demand for prostitution, yet Government policy cannot simply focus on demand.
"It must also look thoughtfully and intelligently at the issues which lead vulnerable people to becoming prostitutes in the first place."Reuse content